The Government’s application of the fiscal policy framework in 2024

The Government maintains that the support to Ukraine does not warrant any specific measure in the form of savings in other areas or tax increases. The Swedish National Audit Office considers that this exemption from customary budget review and prioritisation is not consistent with the fiscal policy framework. Over time, such exemptions may risk leading to a fiscal policy framework that lacks the intended governing function. The fiscal policy framework does not allow for any exemption for special types of expenditure and funding is required for investments that do not fall within the scope of the fiscal policy targets.

The Swedish National Audit Office considers that the plan for a return to the surplus target presented by the Government is too summary. While the plan presupposes and implies that no further unfunded reforms will be implemented until after 2027, the Government does not address this matter. In the future, the Government should more clearly present the implications of the plan for a return to target.

It is important that the Government work to enhance the description and the figures in the various explanations of why the Government’s forecasts differ from those of other forecasters, in particular the National Institute of Economic Research and the Swedish National Financial Management Authority. Different assessments and assumptions in the forecasting can result in forecasters making different assessments of whether there is a deviation from the surplus target and thereby how fiscal policy should be shaped. Without an advanced analysis of the differences between the forecasts, it is not possible to understand how the other central government forecasting institutions constitute ‘second opinions’ compared with the Government’s forecast. This can ultimately cast doubt on the value of having multiple central government forecasting institutions.

The Swedish National Audit Office considers that the Government’s proposal for increased levels of expenditure ceilings for 2025 and 2026 would not have been necessary. Even with the previously decided level for 2025, the budgeting margin is large and for 2026, taking into account the surplus target, there is no room for further unfunded reforms. Raising the already agreed levels of the expenditure ceiling further, which the Government proposes with respect to its support to Ukraine, further risks weakening overall budgetary discipline. The Government should also improve its presentation on what factors have guided the proposed expenditure ceiling for 2027 (the third budget year ahead).

The Government has proposed relatively extensive amendments to the central government budget in the amending budgets submitted to the Riksdag in 2024, mainly involving increased appropriations. Transparency in the amending budgets has been acceptable, but it is the assessment of the Swedish National Audit Office that there is potential for improvement. The Government could better explain what was unforeseen and what were the other reasons for proposing amendments to the central government budget.